Tweet

Are You Buying a Business or a Job?

Written by: George J Sierchio

Article Overview: It’s amazing what a difference it makes to ask yourself the question “Do I want to buy a business or a job” when preparing to buy a business. To make sure you understand what I mean, let me briefly explain. Let’s say you are looking to get into the business of ...

Are You Buying a Business or a Job?

It’s amazing what a difference it makes to ask yourself the question “Do I want to buy a business or a job” when preparing to buy a business. To make sure you understand what I mean, let me briefly explain.

Let’s say you are looking to get into the house cleaning business. It’s a great business model that includes getting paid on the spot or at worst weekly. Cash flow isn’t an issue and the right location is truly unaffected by the economy. Sounds great right? Well, the next thing to decide is whether or not you plan on actually picking up a duster and vacuum to personally take part in cleaning.

The obvious answer would be; “No, I do not plan on cleaning houses. I will run/manage the business”. You say that now while reading this article, but if you don’t have this very crucial fact in your head before you start looking at established businesses to purchase, you may get caught up in the moment of a “good buy”. In the end you will be running the show and being part of a cleaning crew. So you ended up a business and a job. Congratulations.

A truly challenging but potentially lucrative business segment is anything dealing with food such as delis and restaurants. And not purchasing a job is almost impossibility. That is unless you have the ability to purchase a very well established and very profitable business where the current owner has done the very rare and difficult task of getting this type of heavily cash based business to hum along with true (and trustworthy) management in place.

This is most often seen with someone that owns multiple restaurants (to own more than one this is a must with a time intensive business like this) or has a fairly large family presence working in the business. By the way, lots of the Seller’s family working in any type of business you are looking to purchase is a bad thing. The odds of them sticking around or you wanting them to stick around is rare. This will leave you holding the bag in filling the many gaps they leave.

Although not the scope of this article, this type of situation would prompt a major reduction in the offer price on your part. Any advisor would have forewarned the Seller that an adjustment should have been made upon the decision to sell regarding reducing family on the payroll. Now that you know this, you will realize that mistake quickly and use it to your advantage if the business is worth purchasing. Just like with any other monetary shortcut to keep more cash in your pocket, when you go to sell, it will all catch up to you.

So, getting back to the actual point of this piece, some industries are inherently more job like. Some are impossible to be anything but the owner and not your own employee. Many or what you make of them though.

My definition of buying a job would be the necessity for you, as the owner, to work more than 5 days a week or more than 40 hours a week. The inability to ever leave the business open and running while you go on vacation. The need for you to work in the trenches instead of performing high-level management and planning. Even the need for you to be the main salesperson is buying yourself a job.

Let me be perfectly blunt with you. This is coming from someone that has owned a variety of businesses in different industries, bought and started from scratch. Unless you know you can take a business you are looking to purchase to the level where you are the actual owner and not also an employee of yourself in only a few years, don’t bother. Even if you are considering the restaurant business. I promise that you will be setting yourself up for a very time intensive and stressful business life.

Allow me to give you one more piece of advice straight from me and from talking to others that I have helped development an exit plan or helped to actually sell their business. Owning a business and working the same or more than you did while you were someone else’s employee is not “ok” because you are your own boss. It only takes a year or two for that euphoria of being on your own to take a back seat to “I’m doing twice the work I used to do with ten times the responsibility and half the pay”.

The minority of owners that never get out of this way of dealing with their business keep doing it because they love what they do. Most of the rest continue on because it takes care of their families so they toil away for as long as they can and try to save for a retirement. Some have the skewed notion that after 30 years in business, they can sell it for big bucks and retire on that. If you paid attention to all that you’ve just read, you will realize that a smart Buyer like you is going to give this Seller a rude awakening on how much his business/job is really worth.

Now why would you buy a business to step into that lifestyle? A start-up is an entirely different animal and you have no choice but to wear many hats and work double time until you have the infrastructure and revenue to bring on employees to remove those hats. You are not starting a business; you are buying an “established” one. Do not confuse the two scenarios. If you want to buy a job I strongly suggest you save your money and keep your job. Otherwise look into putting that money into a brand new business.

So let’s recap here. When looking into a particular business to buy, it should have one of two criteria:

Either you are buying more of a job that you think you can turn into business in 2 years or less using the infrastructure and momentum of the current business. This can be by choice to get a cheaper business and use your money to get to the next level/hire more people or it could be a necessity due to your available fund/funding options.

The other scenario is you are buying a business where the owner does not work in the trenches, including not being the top of the sales force food chain, but he/she is the chief operator and high-level thinker.

Keep this in mind and buy yourself a great business.

Related Articles
  How to Say Your Price Without Choking
  Buying a Business FAQs
  Sales Prospecting With Blogging for B2B Sales People
  Market First, Sell Second to Increase Sales in 2011
  Lease Equipment

Article Tags: buying a business, buying a business tips



Related Forum Posts
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: Why Some Websites Sell and Others Don’t? - There is myth that if you build websites people will come. It is never through, you need to do a lot of things to make your website to work. You have many models of attracting traffics to your site. PPC Article Marketing SEO Press Release Banner Ads Forum Posting Classified Advertising Media Buying Solo Ads and a lot of more. If you are not doing any of the above your websites will just be one of the millions of the unknown sites in cyber space
Re: HOw to market a B2B consulting company - [quote="zohahunt77":428owzbi]Hi, I was wondering if anyone can tell me the difference between B2B and B2C. I don’t know about b2b marketing but I have done marketing so know things about it. I will suggest you to take online services which will spread your business all over web network. Online marketing is the best way to market any business.[/quote:428owzbi] B2B = Business to Business - You are marketing to other businesses. B2C = Business to Consumer - You are marketing to consumers.
building a list - Good advice Martin... I've traveled down this path and learned that once you get through that brief learning curve, you'll find that it's well worth it. As you build your highly targeted list, you can trickle in your new offerings over time via 'broadcasts'. I use Aweber too, they have excellent support and a great rep. Buying a list? I'm not so sure about that... You'd really have to do some research to find a quality list service. Whether you buy a list or not, I still think setting up a auto-responder should be a priority, your list will GROW.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Track Your Time for Increased Productivity

Smart & Simple Internet Techniques

Leading from Authenticity is a Beautiful Thing

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.